Poverty, Labour Markets and Trade Liberalization in Indonesia

Arbeitspapier

We measure the effects of trade liberalization over the period of 1993-2002 on regional poverty levels in 259 Indonesian regions, and investigate the labour market mechanisms behind these effects. The identification strategy relies on combining information on initial regional labour and product market structure with the exogenous tariff reduction schedule over four three-year periods. We find that poverty reduced more in regions that were more strongly exposed to import tariff liberalization. Among the potential channels behind this effect, we highlight the formalization of the unskilled labour force and structural reallocation of labour. We also show that job formation and increases in unskilled wages were related to reductions in import tariffs on intermediate goods and not to reductions in import tariffs on final outputs. These results point towards increasing firm competitiveness as a driving factor behind the beneficial poverty effects.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 7645

Classification and Topics

• Classification: Wirtschaft ; Fertility; Family Planning; Child Care; Children; Youth ; Development Planning and Policy: Trade Policy; Factor Movement; Foreign Exchange Policy ; Economic Development: Human Resources; Human Development; Income Distribution; Migration
• Subject: trade liberalization ; labour markets ; poverty ; Indonesia

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kis-Katos, Krisztina ; Sparrow, Robert
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/90005
• Last update: 10.03.2025, 11:44 AM CET